Tat Hong announced that its wholly-owned subsidiary Tutt Bryant Group Limited (TBG) has entered into a conditional sale and leaseback agreement for four of its Australian properties with Primewest Funds Ltd at an aggregate cash consideration of A$23.3m (~S$24.7m). Back in August last year, TBG was unable to reach a final agreement with another party, TransLinQ Income Pte Ltd.

Under the agreement with Primewest, TBG will lease the properties for a period of 12 years at a total rental of A$1.91m (~S$2.0m) per annum, subject to a fixed annual base rent adjustment and market rent reviews on set intervals within the lease term. This disposal of non-core assets would give Tat Hong a realized gain of A$6.7m after deducting expenses, which could be used to potentially fund growth in its core businesses or perhaps reduce its net gearing level of ~71% as of 31 Dec-2014.

We maintain our HOLD rating with S$0.75 fair value estimate.

Source: OCBC Research - 3 Mar 2015